Laura Matthews

Going into the year investors were betting that President Donald Trump's policies would spur U.S. stocks and the dollar to outperform their global peers. That assumption is increasingly getting tested.

U.S. companies with overseas operations are taking advantage of lower rates in euros to slash their debt funding costs and soften the blow of higher interest rates with a hedging strategy that is expected to expand if the Fed continues to pause rate cuts and other central banks do not, bankers and corporate advisers said.

Intercontinental Exchange reported higher than expected fourth-quarter profit on Thursday, as the New York Stock Exchange parent benefited from strong trading volumes in the energy and options segments.

Corporate treasurers are ramping up efforts to guard company earnings against more dollar strength, a move that some analysts said points to increased conviction that President Donald Trump's tariff plans will help keep the U.S. currency higher for longer.

Investors are bracing for a looming hit to U.S. corporate profits and pressure on inflation if President Donald Trump makes good on his tariff threats, with markets seen as not fully factoring in risks from higher levies on foreign imports.

Turbulence in some of the biggest tech names is reminding investors of one of the major risks to the U.S. stock market's record-setting rally: Reliance on a handful of mammoth companies to power those gains.

The dollar held gains against the yen on Friday, but ended the week lower after a six-week winning streak, as investors await Donald Trump's presidential inauguration and clarity on the course of the incoming administration's policies.

The U.S. dollar weakened against the yen on Thursday, as softer-than-expected U.S. economic data and growing confidence for a Bank of Japan interest-rate hike sent it tumbling to a near one-month low against the Japanese currency.

The dollar pared some losses against major peers on Wednesday but stayed weaker as cooler-than-expected data eased fears that inflation was accelerating and increased the chances the Federal Reserve could cut interest rates twice this year.

The dollar weakened against the euro on Tuesday but stayed near its highest level in more than two years as cooler-than-expected inflation data following last week's strong jobs report made it hard to project the Federal Reserve's next moves on interest rates.